Asia markets are declining while the Chinese yuan is tumbling
Asian markets fell on Monday as the Chinese yuan fell sharply, days after US President Donald Trump's promise to introduce new tariffs on goods from China sent the fears of the trade war soaring.
Trump's announcement, which came on Thursday, means virtually anything of $ 660 billion in annual commodity trade between the world's two largest economies will be subject to penalties, with the latest tariffs coming into effect on September 1.
The news saw all three major Wall Street indices fall to their lowest level since June, with the S&P 500 and Nasdaq recording the worst weekly losses in 201[ads1]9 on Friday.
In China, the yuan fell to the lowest dollar level since August 2010, sparking speculation that Beijing is devaluing its currency to support exporters, offsetting Trump's recent threat to hit $ 300 billion in Chinese goods with 10 percent tariffs.
The US leader regularly accuses the Chinese central bank of artificially weakening the yuan – charges that were long denied by Beijing.
Yuan on land fell to 7.0307 against the dollar – the lowest level since 2008 – while the more freely traded yuan fell to 7.1085, breaking the 7.0 level that investors see as a key currency exchange rate limit.
Several rounds of look-for-tat tariffs between the world's top two economies have already hit trade, with China's US imports shrinking 30 percent in the first half.
Beijing has promised to back down if Washington goes ahead with its latest threat, while news that demand for US exports had weakened underscored the concern that trade was a problem for economies worldwide.
– & # 39; Much messenger & # 39; –
"China is likely to pull out the answer and retaliate in many ways against US trade measures," warned Edward Moya, senior market analyst at OANDA.
Although dealers from both nations are expected to rally again in Washington in early September for a second round of talks following last week's discussions in Shanghai, investors are nervous, Moya said.
"Financial markets are still working on pricing in a complete collapse of trade talks among Chinese and Americans," he said.
"The basic thing still remains for an appointment to get done, but the conversations will probably be a lot of rotating before we see anything … similar to an appointment."
The yuan's depreciation spurred a sell-off across Asian markets, and Hong Kong lost more than three percent as protesters from democracy targeted the financial hub's transport network, launching a major strike against the city to force concessions from the embattled pro-Beijing government. [19659002] Tokyo and Seoul dropped 2.4 percent while Shanghai fell 0.8 percent. Singapore fell 1.9 percent while Taipei and Bangkok were also down.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: NED 2.4 percent at 20,590.87 (break)
Hong Kong – Hang Bed: NED 3.1 percent at 26.097.07
Shanghai – Composite: Down 0.8 percent at 2,844.38
Pound / Dollar: Down to $ 1,2153 from $ 1,2162 at 2100 GMT Friday
Euro / Dollar: UP to $ 1, 1227 from $ 1,1106
Dollar / yen: DOWN at 105.88 yen from 106.59 yen
Brent North Sea crude oil: DOWN seven cents to $ 61.19 per barrel
West Texas Intermediate: DOWN 59 cents to $ 55.07 per barrel
New York – Dow: DOWN 0.4 percent at 26,485.01 (close)
London – FTSE 100: DOWN 2.3 percent at 7,407.06 (close) [19659027]
